Canada’s oil-producing regions saw the highest increase in insolvencies over the 12 months to June 2017, according to the latest insolvency report by the federal government. Total insolvencies in Alberta were up 11.6 percent over the 12-month period to June, with actual bankruptcies up by 4.5 percent to 5,346, and bankruptcy proposals up by 16.9 percent to 8,015.
In Saskatchewan, actual bankruptcies were up 5.5 percent to 1,504, and proposals were up 29.7 percent to 1,682. Total bankruptcies increased 17 percent, making the province the one with the highest increase in total insolvencies.
Labrador and Newfoundland completed the top three with total insolvencies up 11.3 percent between June 2016 and June 2017, to 2,436. Actual bankruptcies were down by 7.2 percent, however, while proposals for insolvency increased by 59.7 percent.
Excluding consumer insolvencies, where the pattern was the same as in total insolvencies, Alberta businesses had the worst record for the 120-month period to June 2017, with 193 total bankruptcies, versus 130 for the prior 12-month period, to June 2016. Of this, actual bankruptcies totaled 139 at end-June 2017, versus 91 at end-June 2016.
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The statistics are not surprising and, according to one expert quoted by CBC, illustrate the continuing effect of the 2014 oil price crash. Still, there is a silver lining in the latest figures: the jump in insolvencies in the three major oil-producing provinces of Canada in the 2016-2017 period was smaller than in the prior year, as the industry started to recover.
Despite the increase in insolvencies, however, Canada’s top oil producer, Alberta, has pulled itself up out of the worst recession in 30 years, according to state-owned ATB Financial bank. This year, the lender projects that Alberta will book a GDP growth of 3.2 percent, adding that the local oil industry has yet to return to its role as a provincial growth driver
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.